The latest lockdowns in some of our larger cities are unlikely to significantly interrupt the strong property price growth being recorded. Without question, none of us like being locked down again, but amongst my circle of friends and professional networks, everyone understands why it needs to be done – plus it’s not our first rodeo when it comes to this stuff! When it comes to the property market, we’re busier than ever with many property buyers using the time to organise their finances now that the most recent financial year is behind us, too.
Property price pressure
Some new research out of CoreLogic shows property price movements since the start of the pandemic in Australia from March last year. Sure, there was a period at the start of the first few lockdowns when property prices softened – but not dramatically. In fact, according to CoreLogic, national dwelling values saw a peak-to-trough decline of just -2.1 per cent through 2020, before a recovery trend in October last year.
Some city property markets weathered the initial pandemic-induced lockdowns better than others, but everywhere has experienced strong price growth since. The reasons for this are many and varied, including the fact that listings as well as sales volumes fell during these lockdown periods last year which supported property prices. Likewise, record low interest rates as well as more supportive lending conditions and significant levels of government support and stimulus measures all played their part. The research also found that after a lockdown event, a “catch up” period of property purchases occurs, with demand far outweighing the supply available. Fundamentally, this demand and supply imbalance remains one of the main reasons why property prices are continuing to rise. According to CoreLogic, new listings added to the market currently still do not match levels of demand. Indeed, throughout 2021 there has been a greater volume of sales than new listings added to the market, which has resulted in a very low level of total advertised stock. The total volume of listings across Australia was about 140,000 in July, according to CoreLogic, but the previous five-year average level of total stock for the same time of year was more than 201,000.
No one really knows when the various lockdowns in some our cities will end at this stage but it’s likely that when it does, the property markets will be off and running once again, if they ever in fact truly slowed down. The markets in some of the smaller capital cities such as Adelaide and Brisbane, which haven’t experienced the same volume of significant lockdowns, have continued to record strong results since last year and there is no indication that these conditions will change anytime soon. Those locations, plus others around the nation, also have more affordable property prices, which will increasingly be attractive to interstate migrants as well as investors. At the end of the day, though, the lockdowns are a health directive that all of us are happy to follow to help protect our community.
We can also hopefully assume that we are closer to the end of significant restrictions impacting our lives with the vaccine rollout gathering pace each day.